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Overall company sales declined 24% in second quarter

Polaris Industries reports its snowmobile sales increased 23% in the second quarter compared to the same period a year ago. It was the lone bright spot in the quarterly report.

"The [overall] dealer floor traffic continues to be weak. Creating demand is one of our key priorities for the remainder of the year," said Scott Wine Polaris's CEO, during a conference call.

Polaris says snowmobile sales hit $7.4 million in the second quarter, up from $6.0 million in the same period of 2008. Sales for the first six months, ending June 30, were up 1% to $15.5 million from a year earlier. 

Polaris says the second quarter is historically a low quarter for snowmobile shipments, as deliveries to dealers ramp up in the second half of the calendar year. In addition, the Rush will not begin shipping to dealers until the third quarter.

"Model year 2010 North American dealer orders were within our expectations while international orders were slightly lower than our expectations, largely due to pressures in the Russian market," said Bennett Morgan, president and chief operating officer.

As Polaris had expected, overall sales declined 24% in the second quarter. Sales were $345.9 million, down from $455.7 million in last year's second quarter. Six month sales were down 22% to $657 million from $844 million.

Cash flow provided by operating activities was $24.4 million for the second quarter compared to $53.3 million in the quarter last year. Polaris ties the decrease in cash flow to a decrease in net income and in the dealer holdback of product.

"Our expectations for 2009 remain unchanged and we expect our core markets to remain very challenging, particularly in the motorcycle business," Wine said.

For the full year Polaris expects overall sales to be down 20% compared with 2008.

For the quarter Polaris saw a 25% decline in Off-Road Vehicles division sales at $261.7 compared to $350.3 million last year. ATVs sales were down 30%.

Sales of Victory Motorcycles in the quarter dropped 55% to $10.492 million from $23.409 million in last year's second quarter. Parts, Garments & Accessory sales dropped the least, slipping 13% to $66.248 million from $75.991 million in the period last year.

In an effort to boost sales, Polaris introduced an electric neighborhood vehicle, the Polaris Breeze, in its new On-Road Division. The Breeze is a electric-powered vehicle which is designed for golfing, neighborhood riding, or carrying cargo for consumers in planned communities.

"While we recognize the current economic environment remains challenging, we believe these new product introductions will provide Polaris and our dealers with a definite competitive advantage as the macro-economic environment eventually recovers," Wine said.